Gearing Up for a May Estate Tax Vote

As the May vote in the Senate to repeal the estate tax approaches, nonprofit advocacy groups around the country are stepping up their campaign to save the nation's most progressive tax and a vital source of revenue. OMB Watch urges individuals to email Senators today and let lawmakers know America favors preserving the estate tax and opposes repeal or back-door "reform" that would amount to repeal. Earlier this year, Senate Majority Leader Bill Frist (R-TN) announced his intention to bring estate tax repeal legislation to the floor for a vote in May. While full repeal is favored by a number of conservative Senators, Frist still lacks the 60 votes needed in the Senate to pass such a measure. But a proposal being pushed by conservative Sen. Jon Kyl (R-AZ) as a "reform" option could be equally damaging to federal coffers and the charitable sector. The Kyl proposal would raise exemptions from their current level of $2 million ($4 million for a couple) to $8 or $10 million for individuals and double those amounts for couples. What's worse, Kyl's "reform" would tie the estate tax rate to the current capital gains rate of 15 percent. In the future, should the capital gains rate be reduced down to zero, as conservatives hope will happen, the estate tax would disappear. Even if the rate remained at 15 percent, tying the estate tax to capital gains would cost upwards of 90 percent of full repeal. The Kyl proposal amounts to nothing more than back-door repeal of the estate tax. But because many in the Senate are mindful of Republican efforts to mislead and distort the issue to win elections, political survival may trump sound policy for more than a few Senators. If enough swing Senators, particularly Democrats, are fearful of being labeled as obstructionist in the lead-up to elections in November, they may support even a bad proposal like Kyl's. Yet public perceptions and opinions on the estate tax have shifted. According to a recent national poll conducted by Penn, Schoen & Berland Associates, only 23 percent of Americans favor repeal of the estate tax, while 57 percent want to retain the tax. The number of people who want to keep it rises to 68 percent when given more information about the estate tax. The poll also found estate tax repeal is at the bottom of the list of tax policy changes Americans most want to see enacted. The poll was released by United for a Fair Economy and the Coalition for America's Priorities at an April 11 press conference. The lack of votes to repeal in the Senate has begun to play into the strategies of the supporters who have been working toward an end of the estate tax for years. A few weeks ago, Secretary of Treasury John Snow let slip that he would hope the Senate tried to fully repeal the tax, but in the absence of that, "come to some second-best outcome that would also be more advantageous than where we are today." Snow's comments (which were quickly clarified the next day to express the Secretary's vigorous support of full repeal) came after a number of pro-repeal organizations (the American Farm Bureau among them) amended their positions on the estate tax to include their preferences for reform - should it be necessary. As May approaches, nonprofit groups around the country working in coalition with Americans for a Fair Estate Tax and the Emergency Campaign for America's Priorities will increase ongoing efforts to preserve the estate tax, including releases of new research, grassroots mobilization through national call-in days and email campaigns, and television ad campaigns in targeted states. We need your help! The estate tax not only pays for vital federal services and support, but also includes an important incentive for charitable giving - both critical issues for nonprofit organizations. Email your Senators today to let them know you favor preserving the estate tax and oppose any repeal or back-door reform options.
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